CNBC’s Brian Kelly Explains Why He Has Been Shorting Bitcoin

On Monday (17 December 2018), CNBC contributor Brian Kelly, who is also the founder and CEO of crypto investment firm BKCM LLC, answered those critics who had been complaining about his continuous bullishness on Bitcoin despite the severe price correction we have seen this year. Kelly's comments came during an interview with Melissa Lee on CBNC's "Power Lunch" show.

What Is the Bull Case for Bitcoin?

"For me, the bull case is that everything that you can say is wrong with Bitcoin is going to get fixed. Similar to the internet when it was super slow and you had dial-up internet and people didn't want to shop online and all of those things... as the technology progressed, it got better, and it got a higher adoption rate. So, the bull case is it's got to get better and you gotta to have an adoption rate where it's roughly... 10%"

How Have you been trading Bitcoin?

"First of all, I started talking about Bitcoin in 2013, when it was as low as $250. But, second of all, I've always said one to five percent of your portfolio should be allocated to this because this is the riskiest thing you can do with your money. That being said, at my firm, we run a long-short crypto hedge fund. We have systematic models that are both long and short on a long and short term basis. So, at any given time, we can be short Bitcoin. Doesn't mean we don't like it anymore, but these are markets, and we need to trade the markets that we have."

How Often This Year Have You Been Short vs. Long Bitcoin?

"So, directionally right now, we are about neutral. We probably have a net short position on it at this point in time, but I think we're getting closer to the bottom. We have the preconditions for the bottom. Kind of the mania we had last year, you're seeing that reflected here in a pessimism. So, the preconditions are there. Wouldn't surprise me if we popped down to $2,900 on Bitcoin before we bottom. That's kind of what I'm looking at as the next level."

Does the 80% Decline in Bitcoin Price Help or Hurt When Convincing Institutional Investors to Move Into the Crypto Space?

"You know, it's interesting. I would have thought that it [would] hurt it, but I can just tell you, from the phone calls that we're having, institutions are looking at this as 'OK, this has gone through a bear market; it didn't go away; and so we need to get some exposure to it'. And if you look back at the history of Bitcoin, it's done this about three times since inception: 2010–2012, 2014–2016, and now, let's call it, 2017–2018. It is subject to these boom and bust cycles."